Small-cap mutual funds recorded net inflows of approximately ₹440 billion during 2025 despite negative year-to-date returns. Fund flows improved toward the latter part of the year as valuations moderated closer to five-year averages. November data showed renewed investor participation, even as volatility persisted across broader equity segments and performance remained uneven among small-cap stocks.

India’s markets regulator is advancing reforms to mutual fund fee structures, aiming to increase transparency and reduce the cost burden for investors. Proposed changes include clearer disclosure of expense components and revisions that may lower average charges over time. The consultation paper suggests segregating statutory levies from base expense ratios and simplifying cost presentation